"However, even overlooking the technological problems (frankly, broadband networks in most places simply aren't up to the task suggested here, and that's even if the video compression works as well as advertised), OnLive's business model simply doesn't add up. Videogames remain cutting edge, technologically, because the cost of new hardware is spread out among consumers. Pooling that entire cost into a gigantic datacentre, an IT engineering feat beyond anything previously attempted, and then trying to pay for it through an ongoing subscription system is an idea which may sound great - but making it work economically is very, very hard. "

Also

"Now consider what OnLive is proposing. Under OnLive's system, consumers would no longer buy the processing and rendering hardware required to play games. Their setup costs would be next to nothing; they would use an existing laptop or desktop PC, which doesn't need any particularly powerful components, or a tiny "microconsole" that sits on the back of their television and doesn't do anything other than decode video streams, and would cost next to nothing. (Under OnLive's proposed model, it would be provided for free.)

Instead, all of the processing power required to play the games - all of those expensive, hot, electricity-guzzling GPUs and CPUs - would be bought by OnLive, or by their publisher partners. They would be housed at a datacentre, and accessed across the network. One system (perhaps not a physically discrete unit, but something with the complete power of a gaming PC/console system) per concurrent user. In fact, because OnLive's systems would be having to compress a high-definition video stream as well as play the game itself, those systems would need to be rather more powerful than an equivalent gaming system stored under the television.

The scale of the enterprise - and of the costs - we're talking about here is absolutely unprecedented. What OnLive is proposing is nothing short of the largest, most expensive and most energy-hungry datacentre ever constructed; an infrastructure undertaking on a scale which would make enterprises like Google, YouTube, iTunes and Facebook look like a walk in the park.

There is simply no readily available comparison for what OnLive is suggesting here. Streaming high-definition video services, even hugely popular ones like YouTube or the BBC's iPlayer, are several orders of magnitude less demanding - because all they're really doing, at the end of the day, is serving a pre-rendered file to their users. They're not doing anything in real-time, unlike OnLive, which is proposing to 3D render an extraordinarily taxing scene, encode it as a high-definition video and send it across the network, anything from 30 to 60 times a second - for every single connected user."